IRS audit examining UI’s payroll practices
As an IRS payroll audit on the University of Idaho draws to a close, UI President Chuck Staben said the agency’s expectations have clearly changed when it comes to recording travel expenses for the university president and their spouse.
“There just wasn’t that kind of scrutiny prior to this kind of audit,” Staben said. “And it looks like the University of Idaho may have been a test case for the IRS on that issue specifically.”
While auditing UI, General Counsel Kent Nelson said the IRS looked at whether or not UI properly conducted tax withholdings for employees and whether or not the university paid its fair share to federal programs, such as Social Security and Medicare. The payroll audit focused on the 2011 and 2012 tax years.
“It was a general audit,” Nelson said. “It wasn’t something where they came in and said ‘We think you’re doing something wrong in a particular spot.'”
While the audit is still ongoing, Nelson said most of the work has been completed and the university is close to a final resolution with the IRS.
With the scale and scope of the audit, Nelson said he anticipates the IRS will discover the university owes the agency some amount of money, which would then be paid.
Although the IRS did not look at all of UI’s contractors, Nelson said the agency did review documents related to how UI determined whether a payment to an employee was part of their salary or part of something else, such as a contract.
Staben said one of the key findings of the IRS audit related to the expenditures — specifically the travel expenditures — of former UI President Duane Nellis and his wife Ruthie Nellis.
While Staben said Nellis’ travel was justified, the expectations were not clear and there was a different level of expectation when it came to documenting travel expenses.
“That just wasn’t the way people did things then,” Staben said.
Staben said the IRS audit was unusual due to the high level of scrutiny it required from UI. At the moment, he said many universities do not have a clear understanding of the high expectations related to documenting presidential expenses.
Staben said his administration welcomes that kind of scrutiny. He said the public has a right to know and be confident in how higher education leaders are spending public dollars.
“We welcome that change, and we will meet that high standard,” Staben said.
In his administration, Staben said he has taken steps to make sure travel expenditures for him and his wife, Mary Beth, are clearly documented.
Nelson said these audits are often times an opportunity to find where the university could do better in its record keeping.
Overall, Nelson said the audit was not surprising since federal agencies have placed a focus on compliance with higher education institutions.
“There’s no reason to expect the IRS to be any different,” Nelson said.
Ryan Tarinelli can be reached at [email protected] or on Twitter at @ryantarinelli